The Slovenia Times

Slovenia and Croatia Solving Painful LB Deposits Issue

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25 June 1991 - Under the constitutional law for the implementation of the Basic Constitutional Charter on Independence, Slovenia takes over from the former Yugoslav central bank (NBJ) the responsibility to guarantee foreign currency deposits in banks on Slovenian territory.

23 February 1993 - The National Assembly passes a law setting up a succession fund responsible for the settlement of claims and liabilities of individuals and legal entities from Slovenia in the division of assets, rights, and obligations of the former Yugoslav federation.

19 June 1993 - The main Sarajevo subsidiary of Slovenian bank LB is registered as an independent bank.

23 December 1991 - The Croatian government adopts a decree to transfer Croatian citizens' foreign currency deposits in banks in Croatia into public debt. Out of EUR 420m-worth of deposits in LB, EUR 260m are turned to Croatia's public debt, according to data from the Croatian central bank.

27 July 1994 - Under changes to the 1991 constitutional law, Slovenia creates NLB (Nova Ljubljanska banka), to which it transfers LB operations and assets on accounts at home and abroad. LB keeps the liabilities to foreign banks and NBJ as well as those arising from foreign currency deposits of savers from other countries emerging from the former Yugoslavia.

26 June 1997 - The National Assembly passes changes to the succession fund act which suspend all court proceedings in Slovenia related to succession. Accordingly, 110 lawsuits and three foreclosures against LB and NLB before the relevant court in Ljubljana are suspended.

March 1999 - The prime ministers of Slovenia and Croatia, Janez Drnovšek and Zlatko Mateša, agree the countries will ask the International Monetary Fund (IMF) to give an opinion on the status of LB Zagreb. Slovenia refers the relevant documents to the IMF in June 1999, but Croatia fails to do so.

2000 - The Croatian central bank closes the account of LB Zagreb, which in effect makes the bank unfit to operate.

29 June 2001 - The countries that emerged from the former Yugoslavia pen a succession agreement in Austria's Vienna. The treaty sets out that guarantees for the old foreign currency deposits are a matter of talks held under the auspices of the Bank for International Settlements in Basel (BIS). Slovenia ratifies the deal in 2002 and Croatia in 2004.

18 December 2001 - The first round of BIS-sponsored negotiations on succession of guarantees for foreign currency deposits is held in Basel. This and the subsequent rounds of talks on 12 March, 28 May and 5 July 2002, fail to produce results.

8 April 2004 - The European Court of Human Rights admits a case brought by three LB Zagreb savers against Slovenia in 1998.

2 June 2004 - The succession agreement takes effect.

17 March 2005 - The Slovenian Constitutional Court finds the July 2004 law transforming the succession fund and setting up a public agency for succession to be unconstitutional in that it fails to stipulate resumption of court proceedings suspended based on the succession fund act.

6 June 2005 - The board of high representatives for succession meets for the first time after the 2001 succession agreement was signed; representatives of all successor countries meet again in June 2007 at Slovenia's Brdo pri Kranju and in September 2009 in Belgrade.

6 March 2006 - Slovenia's parliament passes a law transforming the succession fund, but the provisions retain the suspension of all court proceedings in Slovenia related to succession.

16 March 2006 - The Croatian central bank issues an opinion saying that NLB or its qualified shareholders may not enter the Croatian market until the LB debt issue is resolved.

10 April 2006 - The EU calls on Croatia to ensure non-discriminatory treatment of all EU companies after Belgian banking group KBC is prevented from entering the Croatian market due to its equity holding in NLB.

6 November 2006 - In a decision labelled as a landmark in Slovenia, the European Court of Human Rights rejects the complaint by three Croatian LB savers (Kovačič and others v. Slovenia), arguing that two complainants had been fully reimbursed while the third one had failed to exhaust all legal avenues in Croatia.

21 June 2007 - The LB Zagreb branch files a complaint against Croatia at the European Court of Human Rights after failing to collect debt from a Croatian firm in Croatian courts.

July 2007 - The Slovenian government sends the Croatian government a package of proposals for the resolution of open issues. The content remains classified but Prime Minister Janez Janša says that the issue would be tackled bilaterally.

2 December 2009 - The Constitutional Court annuls the provision of Article 23 of the act on the succession fund and the high representative for succession, arguing that it violates the right to judicial protection. The decision unlocks suspended proceedings against LB and NLB at Slovenian courts.

15 February 2010 - The Ljubljana District Court rules in favour of a Croatian plaintiff who sought compensation from LB, in what is the first case heard by the court after the Constitutional Court ruled the freeze on court proceedings involving succession unconstitutional.

31 July 2010 - Prime Ministers Borut Pahor and Jadranka Kosor agree to resolve the issue on the basis of the 2001 succession agreement, with experts expected to lay down the details of renewed talks under the auspices of the Bank for International Settlements (BIS).

15 November 2010 - Croatia says it received a response from BIS that it is not competent to resolve the issue, but is willing to help in organising a meeting of the successor states on the issue.

19 April 2012 - The Croatian government endorses Zagrebačka banka and PBZ in proceedings against LB and NLB. The decision is revoked on 5 May, as the government deems it unnecessary, but the original 1990s authorization for the two banks remains in place.

7 July 2012 - Foreign Ministers Karl Erjavec and Vesna Pusić agree that financial experts would be appointed and tasked with proposing a solution to the LB deposits that were transferred into Croatia's public debt. Former central bankers France Arhar and Zdravko Rogič are named to the task force.

27 July 2012 - A Zagreb court rules in favour of PBZ in a claim against LB and NLB. The judgement is not final, LB, NLB and PBZ announce appeals.

6 November 2012 - The European Court of Human Rights rules against Slovenia in the case of two savers of the Sarajevo branch of LB, ordering Slovenia to take measures to reimburse all savers.

6 February 2013 - Foreign Ministers Karl Erjavec and Vesna Pusić reach an agreement in a marathon meeting in Otočec they say is acceptable for both sides.

7 March 2013 - Government representatives initial a memorandum on the LB issue in which the two countries agree to resolve the issue of transferred deposits in the framework of succession. Croatia will stop all lawsuits against LB and NLB and Slovenia will make sure it ratifies Croatia's EU Accession Treaty in time.
 

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